Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $25,820. After estimating costs and revenues, Barney projects a net cash inflow from the retreading machine of $4,900 annually for 7 years. Barney hopes to earn a return of 6% on such investments.
What is the present value of the retreading operation?
(Round answer to 2 decimal places, e.g.
25.25.)
Present value | $
|
Should Barney Googal purchase the retreading machine?
Barney Googal
|
purchase the retreading machine. |
Cost of machine = $25,820
Annual cash inflow = $4,900
Time period (n) = 7 years
Interest rate (i) = 6%
Present value of cash inflows = Annual cash inflow x Present value annuity factor (i%, n)
= 4,900 x Present value annuity factor (6%, 7)
= 4,900 x 5.58238
= $27,353.66
Net present value = Present value of cash inflows/Cost of machine
= 27,353.66 - 25,820
= $1,533.66
Barney Googal should purchase the retreading machine since Net present value of the machine is positive.
Please ask if you have any query related to the question. Thank you
Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $25,820. After estimating cost...
Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $26,820. After estimating costs and revenues, Barney projects a net cash inflow from the retreading machine of $4,200 annually for 10 years. Barney hopes to earn a return of 8% on such investments (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the present value of the retreading operation? (Round answer to 2 decimal places, e.g. 25.25.) Should Barney...
Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $20,820. After estimating costs and revenues, Barney projects a net cash inflow from the retreading machine of $4,500 annually for 7 years. Barney hopes to earn a return of 10 % on such investments. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the foctor table provided) What is the present value of the retreading operation? (Round answer...
Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $20,820. After estimating costs and revenues, Barney projects a net cash inflow from the retreading machine of $4,500 annually for 7 years. Barney hopes to earn a return of 10% on such investments. What is the present value of the retreading operation?
Brief Exercise A-22 Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $13,820. After estimating costs and revenues, Barney projects a net cash inflow from the retreading machine of $2,600 annually for 7 years. Barney hopes to earn a return of 6% on such investments. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the present value of the retreading operation?...
ment FULL SCREEN PRINTER VERSION NEXT Brief Exercise A-22 Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $15,820. After estimating costs and revenues, Barney projects a net cash Inflow from the retreading machine of $3,900 annually for 6 years. Barney hopes to earn a return of 9% on such Investments Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the...
Please help! You've never done me wrong yet!
1A:
1B:1C:
Question 1 --/1 View Policies Current Attempt in Progress Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $166,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual cash flows by $32,982. Click here to view PV table. What is its approximate internal rate of...
bates company issued 1,200,000, 13 year bonds. it agreed to make
annual deposits of 73,500 to a fund, which will be used to pay off
the principal amount of the bond at the end of 13 years. The
deposits are made at the end of the year into an account paying 4%
annual interest. what amount will be in the sinking fund at the end
of 13 years?
Amount in sinking funds-
he estimating costs and revenu e Brief Exercise...